2011 (11) TMI 433 - HC - Income Tax

Expenditure related to rebate allowed to certain institutional bodies against the advances received during the years 1991 to 2002 - Tribunal allowed it as one time expenditure - Revenue alleged non- production of evidences to relate it to relevant A.Y. 03-04 - Held that - The documents on record prove that rebate was allowed as one-time expenditure during the relevant assessment year in pursuance of the decision of the board of directors dated 18.04.2002. It is finding of fact. Therefore no substantial question of law arises for consideration by this court - Decided against the Revenue.

Summary

Issues:
1. Justification of confirming deletion of addition of Rs. 7,09,57,404 despite failure to furnish information/details as per directions.
2. Justification of deleting the addition of Rs. 7,09,57,404 without establishing the expenditure as allowable.
3. Justification of holding that the expenditure is entirely relatable to the relevant year without filing relevant details.

Issue 1:
The Revenue appealed under section 260A of the Income-tax Act, 1961, questioning the deletion of an addition of Rs. 7,09,57,404 by the Income-tax Appellate Tribunal (ITAT). The Tribunal confirmed the deletion despite the assessee's failure to provide information as directed by the Assessing Officer. The Tribunal found that the amount was allowed as one-time expenditure based on a decision by the board of directors, which was deemed a commercial decision relating to the assessment year. The Tribunal held that the rebate was given to institutional bodies against advances received during specific years. The court dismissed the appeal, stating that the documents on record supported the one-time expenditure during the relevant assessment year, making the argument of lack of additional evidence untenable.

Issue 2:
The second issue raised was the justification for deleting the addition of Rs. 7,09,57,404 without the assessee proving the expenditure as allowable. The Tribunal found that the rebate was a one-time expenditure approved by the board of directors, and the decision was commercial in nature. The court upheld the Tribunal's decision, emphasizing that the expenditure was justified based on the board's decision and the circumstances of the case. The court concluded that no substantial question of law arose for consideration, leading to the dismissal of the appeal.

Issue 3:
The final issue revolved around the Tribunal's decision that the expenditure of Rs. 7,09,57,404 was entirely related to the relevant assessment year, despite the assessee not submitting all details as per the specific direction. The Tribunal's finding was based on the documents on record, which demonstrated that the rebate was allowed as one-time expenditure in line with the board of directors' decision. The court maintained that as it was a finding of fact, there was no substantial question of law to consider, resulting in the dismissal of the appeal.

In summary, the High Court upheld the ITAT's decision to delete the addition of Rs. 7,09,57,404, emphasizing the commercial nature of the expenditure approved by the board of directors. The court dismissed the Revenue's appeal, stating that the expenditure was justified for the relevant assessment year based on the available evidence and the board's decision.